Why Warren Buffett considers the deal he made with an 89-year-old woman one of the best of his career

Every year, undergraduate students from 40 universities compete
for a trip to Omaha to spend a day with Warren Buffett.

The annual tradition always begins at Nebraska Furniture Mart
(NFM), which Buffett acquired from the late Rose "Mrs. B" Blumkin
in 1983 for his conglomerate Berkshire Hathaway.

Blumkin immigrated to the US from Russia when she was in
her early 20s and founded NFM in 1937 with a $500 loan from her
brother and money she had saved from selling used clothing with
her husband, who died in 1950.

Today, her store is worth around $1 billion, which
is immaterial among Berkshire Hathaway's assets but worth a
priceless amount of inspiration. Buffett brings students to
Blumkin's store to show what can result from sheer will and hard
work.

Blumkin was born into a poor Jewish village near Minsk, now the
capital of Belarus, in 1893 and began working at the age of six,
becoming a store manager at 16,
the New York Times reported.

After making her way to Omaha and opening NFM while her husband
ran his secondhand clothing business, Blumkin began putting in
seven-day, 70-hour workweeks and incorporated her son and
grandchildren into the company as time passed.

She distinguished herself with customers by selling products at
prices much lower than her competitors. When this approach made
her store increasingly popular, her bigger competitors in Omaha
convinced furniture manufacturers to boycott selling to her. In
response, she bought from suppliers elsewhere across the country
and continued to sell at the cheap prices she wanted.

By the time she made it onto Buffett's radar in the early '80s,
Nebraska Furniture Mart was the biggest furniture retailer in the
US.

As she told
NBC News not long after making the deal with Buffett, in
broken English: "I'm the best operator — not that I'm bragging —
in the country with common sense. I don't know education, books,
percentage. I used the old-fashioned way!"

Blumkin agreed to make a deal with Buffett at the age of 89
because, she figured, if she sold the company before she died,
then her children wouldn't fight over it.

In his shareholders' letter, Buffett remembers going to see
Blumkin on his birthday, August 30, 1983, with a purchase
proposal just over a page in length. He didn't audit her company,
but he trusted her intuition.

Mrs. B didn't let age stop
her from putting in long hours, and used a scooter to get
around.NBC News

"Mrs. B accepted my offer without changing a word, and we
completed the deal without the involvement of investment bankers
or lawyers (an experience that can only be described as
heavenly)," he writes.

Her family continued to manage the company and she would continue
to put in long hours at the store despite her age, zipping around
on an electric scooter, pitching furniture to customers.

As
the Times reported, her family essentially forced her into
retirement at the age of 95, but it only took three months before
she set up a rival store across the street from NFM, called Mrs.
B's Clearance and Factory Outlet. By 1991, it had become the
third-largest carpet outlet in the state.

Buffett helped repair the family rift the next year and absorbed
Blumkin's venture into NFM. He joked that he should have added a
noncompete clause to the contract after he bought her company.

Mrs. B died at the age of 104, and her legacy is still very much
part of her family's business, which has opened locations in
Iowa, Kansas, and Texas.

Buffett has previously told reporters that he would have rather
done business with Blumkin over any highly pedigreed MBA in the
country. He recently compared her to late Wal-Mart founder Sam
Walton
at an Ivey Business School Panel:

One thing that Sam Walton and Mrs. B had in common is they had
passion for the business. It isn't about the money, at all.

It was about winning. Passion counts enormously; you have to
really be doing it because you love the results, rather than the
money.

When we buy businesses, we are looking for people that will not
lose an ounce of passion for the business even after their
business is sold.

After all, he said, doing business with someone who is driven by
beating the competition by creating a superior company rather
than simply finding ways to build a war chest "is what it's all
about."